The Coinage Act Of 1857

I have recently written this essay as an assignment for the ANA Young Numismatists program. It is about the coinage act of 1857 - Enjoy!

The Coinage Act of 1857

In the year 1856, the average monetary transaction looked vastly different than it does today. First of all, prices were lower - a loaf of bread cost approximately $0.20 and a dozen eggs cost $0.17. Also in 1856, paper money was far less common, and many everyday purchases were made using coins. Cents, often incorrectly called pennies, were common, but what the average American might not know is that they were larger than a quarter. Also in 1856, one could buy a $0.20 loaf of bread using 40 coins. This is because the Half Cent coin was widely circulated. Finally, the average foreigner who immigrated to America did not have to exchange his money for American dollars, because most foreign coins were considered legal tender in the US. In fact, some American towns had more foreign coins circulating than American coins. This is because the US mint did not have the capacity to supply coins for the entire nation. You might be wondering why I have been discussing the specific year of 1856; this is because in 1857, many things about US coinage changed drastically. In 1857, legislators came together and discussed a plan to fix many problems that were caused by the current state of coins in the US economy. First, they reduced the size of the large cents. Second, they entirely eliminated that Half Cent. Finally, they discontinued the legal tender status of foreign coins.

The first problem that the Coinage Act of 1857 fixed is it significantly reduced the size of the large cent. There were two primary reasons why the large cent needed to be made smaller. First, these large coins were cumbersome and many institutions began to refuse them as payment as early as the 1840s. Second, copper was becoming more valuable and the cost to mint a large cent had surpassed the coin's face value. Mint officials began experimenting with using other metals in the place of copper but ultimately determined that the best way to reduce the cost of minting cents was to decrease their size. As outlined in the Coinage Act of 1857, the size of the cent decreased from a diameter of 27.5 mm in 1856 to 19mm in 1857. The weight of the cent decreased from 10.9 grams in 1856 to 4.1 grams in 1857.

The second major change that was brought about by the Coinage Act of 1857 is Half Cents were banned entirely. The reasoning behind this was similar to why the size of the large cent was reduced. These coins were cumbersome and cost more to mint than their face value. If the mint decided to shrink these coins rather than cease production, they would be so small that they would get lost constantly. The Half Cent served its purpose during its time, and has become very popular among collectors today, but the decision to stop minting it was more than reasonable.

The third major aspect of monetary transactions that was changed by the Coinage Act of 1857 is that foreign currency was demonetized. Before this act was passed, a wide array of foreign currency was accepted as legal tender in the United States. This included Spanish reales, Mexican pesos, British pounds, German thalers, and others. When the Coinage Act was passed, these foreign gold and silver coins were able to be turned in at the mint in exchange for the newly minted American small cents. The foreign coins would then be melted down and recoined. Despite this effort to achieve a government monopoly on the production of coins, foreign coins continued to circulate in rural areas until as late as the 1890s. When establishing the US monetary system back in 1792, Alexander Hamilton wrote a law stating that all foreign currency would cease to circulate in 1795, but this deadline was reworked and pushed back several times. When foreign currency was declared not legal tender in 1857, it was the right decision which had been long overdue.

In conclusion, the Coinage Act of 1857 fixed many problems that had plagued Americans for far too long. It reduced the size of the large cent, discontinued the production of the Half Cent, and ended the legal tender status of foreign coins. Today, large cents and Half Cents alike are both very collectible and serve as a memory of early years in American history.

If you have any thoughts or corrections, please let me know. Thanks!

@American Numismatic Association